The following study is based on the development of effective market entry strategy and business level strategy plan to enter into the new market. Here Card Factory has been chosen as the organisation and Chinese Card market has been selected as the new market. Card Factory is known as the chain of gift store or greeting card in the UK (United Kingdom). The various products offered by this establishment are greeting cards, gift items and much more (CardFactory.co.uk, 2017). The organisation was established in the year 1997. The corporation is also listed on the London Stock Exchange. The present report would evaluate the PESTLE analysis to assess the effectiveness of the Chinese Card market for the company and Porter’s forces analysis to evaluate the competitive position within the Chinese market.
In this section, the discussion is about the PESTLE analysis of the Chinese Card market to evaluate its effectiveness for card business.
The detail information of different factors is given below:
The China government majorly followed both such as formal and informal rules as well as regulations to make sure the improvement of business operations and functions in the market. Moreover, the government of China also has the strong influence and commitment towards the improvement of business operations of different types (Bickhoff, et al., 2014). To increase the business demand in the government, try to encourage the foreign investors to do the business in this countries. The government has also developed new laws so that the companies in relation to card and gift industry are able to perform the business activities (CardFactory.co.uk, 2017). The government has also established some free trade agreement, which is beneficial for Card Factory to enter into the market with the help of free trade agreement.
The GDP growth is increasing in China from last five decades, which has the positive effect on economic growth of the country. China is also permitted the foreign direct investment, which is effective for Card Factory to improve the business growth. The current Chinese rate is 1 Chinese Yuan is equal to 9.61 Indian Rupee. The Chinese currency is regarded as the third power currency in IMF (International Monetary Fund). Moreover, the currency of China has the strong influence on business growth and economic growth in the country (Brooksbank, 2013). Low labour cost would be also beneficial Card Factory to acquire the good labour with low cost and maintain the budget of business, which generates the better prospect for Card Factory to enhance the business growth.
The social factor also has the effect on all types of businesses and its functions. The opportunity of an ample number of skilled labour is also effective for card factory to get the skilled employees and ensure the successful operations. The shopping habit or buying pattern of China is keeping changing based on changes in current trends. The consumers of China spend some time in offline as well as online shopping to buy their preferred products. The consumers also have the good knowledge about brand products, and they preferred such type of products rather than other products. By delivering quality brand products, Card Factory is able to satisfy their increasing needs. With the introduction of e-commerce, the concept of online shopping has been developed in China, which has the positive effect on Card Factory to increase the customer base and raise the profit margin.
There is an opportunity to obtain the facility of technological innovation for example, internet facility and production technology (Hitt, et al., 2012). In this regard, with the help of strong internet facility, Card Factory is able to introduce the concept of online shopping in China market and provide the new platform to the consumers to purchase their required products. But there is still some problem in terms of the online payment system and credit system. Therefore, the company needs to consider such issues to develop the effective strategies in terms of avoiding the issues.
The government of China has decided to develop the new framework so that every business is able to do the successful business and increase the business efficiency. Therefore, the effective legislation is efficient for the company to prevent the business from the unnecessary issue and ensure the successful business operations. The employment law of China is related to the interest and rights of employees. In this way, it is possible to meet the needs of employees and increase their interest towards their works (West, et al., 2015). The initiative of the government of China in relation to employment law is also helpful for Card Factory to manage the business operations properly in China market.
The population of China is aware of the safety of the environment. Due to the development of latest technology, it is quite easy to protect the environment from various environmental issues and make sure the environmental safety (McDONALD, 2016). Therefore, there is an opportunity to gain the proper knowledge regarding the environment safety along with doing the successful business without facing any environmental issue.
In this context, the market of China is appropriate for Card Factory to expand the business operation and run the business successfully.
Porter’s five forces analysis
The Porter’s five forces analysis has been conducted here to assess the competitive positive of the company within the market of China.
Suppliers play the vital in terms of offering the quality raw material for producing the finished products (Moon, et al., 2014). Being a part of the retail industry, the bargaining power of suppliers is moderate in China due to increasing the demand for suppliers and availability of lots of retail card industries.
Bargaining power buyers:
The bargaining power of buyers is high. The products offered by the company are different types of gift products, cards and so on. The company also provides a variety of good designer card and gift items to draw the attention of more customers and raise the customer base.
The threat of new entry:
The threat of new entry is also moderate in China for the reason of entry barriers and the formulation of new legislation for the new entrance company. The government restriction is not so high in terms of entering into China for starting the new business and expanding the existing business.
The threat of substitutes:
One of leading card retailers in China is the Chinese card factory, which also delivers the similar type of products. The substitute of products is card as well as gift items. It is also the card manufacturer in China. But the design and quality of products of Card Factory are quite different from the products of competitors (Hitt, et al., 2012). In this context, the threat of substitutes is also medium within Chinese card market.
The competitive rivalry is high in China due to the availability of other retail industries. The major competitors of Card Factory in China market are Chinese Gift Shop and Chinese card factory. For this reason, the company would face the huge competition problem in China in terms of attracting customers, selling products and increasing profitability.
Opportunities and threats
Based on the above discussion of PESTLE analysis and Porter’s five forces analysis the SWOT analysis in relation to Card Factory has given below:
- Popular brand name
- Provides good quality and variety of card and gifts with reasonable price
- Good management and decision making skills
- Unable to cope up with the quick change
- Limited range of online facility
The stated weaknesses can be addressed with the assistance of efficient business strategy and the management capabilities.
- To ensure the potential growth in future
- To increase the brand awareness in China (Eyvrigh, 2016)
Card Factory will be able to take advantage of above-stated opportunities by providing quality products and fulfilling the needs of customers in China. In this way, the awareness of customers can be raised based on which the customer base and business profitability can also be increased.
- High competition within the Chinese card market
- To face the problem in raising customer base (Wild, 2014).
To curb it the above-mentioned threats, the company needs to develop a certain efficient strategy along with gaining the information regarding the strategy implemented by its competitors. In this way, the organisation will be able to improve their business strategy and ensure the reduction of threats.
Resource analysis of the company
The company has two types of resources such as tangible resource and intangible resource. The tangible resources are technological resource, financial resource, organisational resource and physical resource. Human resources, reputational resources, and innovation resources are the part of intangible resources. The company has different types of technological resources such as trademarks, patents, copyright and much more. The workforce of the company is also capable of using the new technology to ensure the improvement of quality as well as the design of products (Morden, 2016). The distribution facility is also available in this organisation based on which the corporation is able to deliver the products to the end users on time.
The human resources are skilled, experienced and have the greater knowledge and the innovation skills. They are also capable of developing the good collaboration with customers and other stakeholders to make sure the achievement of organisational goals (Rothaermel, 2015). The current total workforce of the company is nearly 8500, who are capable of dealing with the business related activities and make sure the accomplishment of desired goals of business. The organisation also maintains the positive relationship with their stakeholders for example customers and suppliers to have a positive business environment.
The above figure represents that Card Factory is financially strong to expand the business into China as the revenue of the firm is increasing year by year and it gain the success in the business. Moreover, the organisation has the enough financial resources to start the business and run the business operations successfully in China.
The employees of the corporation are capable of increasing the customer value and loyalty by providing the quality products to their potential customers. The availability of tangible and intangible resources is also beneficial for the company to ensure the sustainable development of the business (Simons, 2013). The company also pay attention to the strategic planning to achieve the strategic goals and improve the business performance.
In which way the existing resources and competencies would create competitive advantage in the Chinese market
The existing resources and competencies would create the competitive advantage in the Chinese market as the corporation has the enough number of quality resources, for example, human, financial and technical resources. The employees of the company have the innovation skills and scientific abilities through which they are able to use their innovative idea to improve the working culture, working condition, and organisational structure. With the help of innovative ideas of its personnel, the organisation will be able to achieve the competitive advantage in China market. (Turnbull & Valla, 2013). The corporation needs to improve the management and leadership quality and apply the strategic plan to ensure the attainment of competitive advantage in China market.
Current strategic statement of the company
The current vision of the company to become one of the largest specialist retailers across the UK.
The mission of the company is to provide the extensive range of products to the customers and satisfying their increasing demands (CardFactory.co.uk, 2017).
The current vision and mission of Card factory must be modified as these are not applicable in terms of expanding the business operations across the world and improve the business performance.
To become the largest specialist card retailer around the world (West, et al., 2015)
To introduce the new product based on the current trends to ensure the improvement of design.
To attain the changes mission and vision, the organisation needs to apply some business level strategies.
- The company should pay attention to cost leadership strategy to maintain business and deliver the quality products with affordable price
- The organisation should understand the needs of customers all countries with the help of good market research to deliver the quality products as per their demands.
Moreover, the company also need to choose appropriate modes of entry to enter the Chinese card market successfully. The various types of modes of entry are licensing, franchising, joint venture and exporting. Among these several modes of entry, joint ventures and licensing will be most suitable one for the company to enter into the China without facing any problem (Ward & Peppard, 2016). In the case of licensing, the company will be able to enter into China by making a legal agreement or contract. With the help of joint venture, the organisation will be able to develop the temporary partnership with the corporation existing in China and enter successfully.
From the above discussion, it has been calculated that the Chinese card market is the suitable place for the organisation to extends the business and ensure the good business environment. The competitive position of the corporation will be good in China due to high buyer power and the average threat of substitute as well as threats of entry. The resources of the company are capable of attaining the competitive advantage in China. The changes vision and mission of the company will be efficient for the corporation to make the strong brand reputation and become leading retailers across the world. The joint venture and licensing can be the appropriate modes of entry to enter the Chinese market without facing any entry problem.
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